Correlation Between Fifth Third and Timberland Bancorp
Can any of the company-specific risk be diversified away by investing in both Fifth Third and Timberland Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fifth Third and Timberland Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fifth Third Bancorp and Timberland Bancorp, you can compare the effects of market volatilities on Fifth Third and Timberland Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fifth Third with a short position of Timberland Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fifth Third and Timberland Bancorp.
Diversification Opportunities for Fifth Third and Timberland Bancorp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fifth and Timberland is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Third Bancorp and Timberland Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timberland Bancorp and Fifth Third is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fifth Third Bancorp are associated (or correlated) with Timberland Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timberland Bancorp has no effect on the direction of Fifth Third i.e., Fifth Third and Timberland Bancorp go up and down completely randomly.
Pair Corralation between Fifth Third and Timberland Bancorp
Given the investment horizon of 90 days Fifth Third Bancorp is expected to generate 1.09 times more return on investment than Timberland Bancorp. However, Fifth Third is 1.09 times more volatile than Timberland Bancorp. It trades about 0.05 of its potential returns per unit of risk. Timberland Bancorp is currently generating about 0.02 per unit of risk. If you would invest 2,970 in Fifth Third Bancorp on September 13, 2024 and sell it today you would earn a total of 1,603 from holding Fifth Third Bancorp or generate 53.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fifth Third Bancorp vs. Timberland Bancorp
Performance |
| Timeline |
| Fifth Third Bancorp |
| Timberland Bancorp |
Fifth Third and Timberland Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fifth Third and Timberland Bancorp
The main advantage of trading using opposite Fifth Third and Timberland Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fifth Third position performs unexpectedly, Timberland Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Timberland Bancorp will offset losses from the drop in Timberland Bancorp's long position.| Fifth Third vs. KeyCorp | Fifth Third vs. Regions Financial | Fifth Third vs. Zions Bancorporation | Fifth Third vs. Huntington Bancshares Incorporated |
| Timberland Bancorp vs. Comerica | Timberland Bancorp vs. Truist Financial Corp | Timberland Bancorp vs. Fifth Third Bancorp | Timberland Bancorp vs. Zions Bancorporation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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